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May 18, 2014

Vote on Account - How is it different from General Budget?

The vote-on-account is usually presented
when the government of the day does not have the time to present a full budget
or because national elections may be near and propriety demands that the task
of framing the full budget be left to the incoming government.

A full fledged Budget has to go through
multiple stages including the general discussion, discussion on Demands for
Grants of various Ministries/Departments, Appropriation Bill and Finance Bill.
All this can take a long time. If for some reason, the government is not in a position to present a full budget before the period for which fresh spending authorization is required, it seeks Parliament's approval for incurring expenditure in respect of the new fiscal till a full budget is presented.

In an election year, the Budgets may be
presented twice—first to secure a vote-on-account for a few months and later in
full. As a convention, a vote-on-account is treated as a formal matter and passed
by Lok Sabha without discussion.

The vote-on-account is normally valid
for for two months and is in operation till the full Budget is passed. But
during an election year, it may be extended for a period more than two months
if it is anticipated that the main demands and the Appropriation Bill will take
longer than two months to be passed by the House.

Tip:

Vote on
Account and Interim Budget are different Terms. The vote-on-account- deals only with the
government's expenditure, but the Interim Budget is a full set of accounts,
including both expenditure and receipts.

In the first interim budget (for
1952-53) presented by C D Deshmukh, the then finance minister, prior to the
first general elections slated for 1952, says that the main purpose of the
interim budget was to place before Parliament an account of the finances of the
central government for the current year (1951-52) and the prospects for the
coming year, allowing it to take a decision on the demands to be placed before
it for a vote on account to meet the expenses of the administration till the
new Parliament considers and passes the budget for the whole year.

Though the vote-on-account merely seeks the Parliament's nod for
incurring expenditure only for part of a fiscal year, the estimates are
presented for the entire year, as is the case in the regular budget.

Lets Answer
Some Questions Now:

What is
Vote-on-Account? When it is used? What is the difference between Vote - On-
Account and Full Budget?

Vote-on-Account
is presented when government has no time to present full Budget or elections
are around the corner.

When the
government does not have enough time to vote for a full budget before the
commencement of the new financial year (like the present government), a special
provision is made to make sure that there is enough money at the disposal of
the government to allow it to run the administration of the country.

This special
provision known as the 'vote-on-account', by which the government obtains the
vote of the Parliament for an amount sufficient to incur expenditure on various
items for a part of the year.

A
vote-on-account cannot alter direct taxes since they need to be passed through
a finance bill.

A common feature of Interim Budget and
Vote-on-Account is that both include the previous year's financial
performance of the government.

Is
Vote-On-Account and Interim Budget same?

The
vote-on-account- deals only with the government's expenditure, but the Interim
Budget is a full set of accounts, including both expenditure and receipts.

What is a
Full Budget?

The Budget
is an official statement which shows the financial position of the ruling
government for a definite period of time based on the estimates of expenses
during the period and proposals for financing them. The full budget shows both,
how the government should spend money and how it should be raised.

Why a
Vote-On-Account and not an Interim Budget?

A government
which has less time left in the Parliament usually go for vote-on-account,
because it is regarded improper for an outgoing government to impose on its
successor changes that may or may not be acceptable to the incoming government.

For how long
can a Vote-On-Account be in force?

The
vote-on-account is normally taken for two months only. But during election year
or when it is anticipated that the main Demands and Appropriation Bill will
take longer time than two months, the vote-on-account may be for a period
extending two months.

Typically
this period does not exceed six months, as that is the maximum gap possible between two sittings of the Parliament.
Normally a vote-on-account is in operation till the full Budget is passed.

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